Industrial Nanotech Inc (INTK)

[boogaloo]

From 1Q filing: NOTE 3. NOTES PAYABLE – RELATED PARTY

http://www.otcmarkets.com/stock/INTK/financials

The Company’s CEO has provided financing for the Company using personal funds. The original note dated March 15, 2005 required interest at 10% per annum compounded monthly. However, the Company mistakenly accrued interest at 6% per year compounded quarterly. The CEO has willing revised the terms of the note to accrue interest at 6% compounded quarterly through June 30, 2010 retroactive to its initial date. Beginning July 1, 2010 the note will accrue interest at 10% compounded monthly.

I wonder how much stock is sold so that related party notes can be repaid? They really need to land some bigger sales soon for fundamental reasons. This kind of thing can snowball. 10% interest, compounded monthly, not a bad return huh?

To help understand compounding, use this site: http://www.webmath.com/compinterest.html

Enter in 800K principle, 10% interest rate, compounded 12 times per year (monthly).

If we use $800K as the amount owed, after year 1 that 800K is now 883K (or 83K in interest). At the end of year 2, it's 976K (or 176K in total interest over 2 years). Compounding monthly is an ugly equation unless the company does some big revenue to offset it. Enter in 5 years to see what happens then ($516K earned just on interest w/out paying down principal). Maybe this helps explain how the CEO could earn a living on this company even if selling stock isn't the method used and if revenues are down and the company is operating in the red? Maybe the co will land a big deal and pay the loan off before such a large amount of interest accrues or paid out.